Central banks to develop their national switches to access payment system and ensure seamlessly transfer funds
Africa | THE INDEPENDENT | The African Continental Free Trade Area (AfCFTA) Secretariat, African Export-Import (Afrexim) Bank, and other partners have unveiled the Pan-African Payment and Settlement System (PAPSS) in a bid to boost the intra-African trade.
This followed successful piloting of the system in the six West African Monetary Zone countries including Ghana, Nigeria, The Gambia, Liberia, Guinea, and Sierra Leone.
Launching the system, Ghanaian Vice President Mahamudu Bawumia said the PAPSS would end Africa’s dependence on third-party currencies to pay for transactions on the continent and help drive the intra-African trade to stimulate industrialization and promote sustainable and inclusive economic growth in Africa.
“This is an African solution for an African problem. It is the most practical and most important achievement in payment system integration on the continent since independence from colonial rule. This is the closest we have come as a continent towards the vision of issuing a common currency,” he added.
The vice president lauded the vision of the AfCFTA secretariat and the Afrexim Bank in developing the system, saying it would benefit micro, small, and medium-scale enterprises, manufacturers, and exporters in the continent-wide trade zone of 1.2 billion people.
Bawumia urged the central banks across the continent to develop their national switches to facilitate the ease of access to the payment system and ensure seamless transfer of funds.
Wamkele Mene, the secretary-general of AfCFTA, said, “The commercial roll-out of the PAPSS today is timely and will boost intra-African trade significantly by making cross-border payments less reliant on third currencies. It will save the continent up to five billion U.S. dollars annually.”
“With the implementation of AfCFTA, we shall see an increase in trade transactions in Africa. This development will, in turn, create the greater demand for cost-effective payment services, underpinning the important nexus between PAPSS and implementation of AfCFTA,” he added
Prof. Benedict Oramah, President and Chairman of the Board of Directors of Afreximbank, said the lender seeks to build upon the African Continental Free Trade Area’s creation of a single market throughout Africa, and that PAPSS provides the state-of-the-art financial market infrastructure connecting African markets to each other thereby enabling instant cross-border payments in respective local African currencies for cross-border trade.
“Afreximbank as the main Settlement Agent for PAPSS, provides settlement guarantees on the payment system and overdraft facilities to all settlement agents, in partnership with Africa’s participating Central Banks. PAPSS will effectively eliminate Africa’s financial borders, formalise and integrate Africa’s payment systems, and play a major role in facilitating and accelerating the huge AfCFTA-induced growth curve in intra-African trade,” he said.